Volatility Creates Opportunity For Innovation

Southern states, with lower business costs and a ready workforce, as well as a critical mass of suppliers, still rule in terms of foreign automotive investment.

“There’s a lot of uncertainty in the automotive industry right now,” says Kim Hill, assistant director, Economics and Business Group, Center for Automotive Research.

“Trying to predict what the folks in DC are thinking as far as mandating energy efficiency and alternative fuels and the like is difficult. So industry executives are even more up in the air than usual on these issues. They’re waiting for a cue—from the consumers—to see if they’re going to continue to buy cars and what kind of cars they are going to buy, and also a cue from Washington to see if there’s something that’s going to be mandated to them other than just some fuel efficiencies or benchmark mileage numbers.”

But most experts agree that the U.S. automotive industry is not going to go away, and uncertainty is often just another word for opportunity. After all, in the midst of all of this volatility, General Motors Corp. recently announced it will be opening a new factory in Michigan to make battery packs for its new Chevrolet Volt, betting part of its $17.4 billion in emergency loans from the U.S. and Canadian governments on electric cars as part of revitalizing its business. In partnership with Compact Power, a division of LG Chem Ltd., a South Korean-based manufacturer, the plant will be building lithium-ion battery packs. It will be the first such facility operated in the U.S. by a major automaker. GM also unveiled a new concept car, the Cadillac Converj, which will use the Voltec system, the same electric propulsion technology used by the Chevrolet Volt.

These and other new technologies were unveiled at the North American International Auto Show in Detroit in January.

“It’s all about eco-friendly, green-friendly cars right now—hybrids, all-electric cars, some hydrogen cars—it’s all about energy efficient and safer cars,” says Bob McKenna, president and CEO, Motor & Equipment Manufacturers Association. So while the economic slide is heavily affecting the automotive industry, there still are areas with room for growth.

“Hybrid power trains are more and more prevalent, and the key component to that is the battery, but also there’s a lot of other components that are being developed such as the parts that shift between the gas power and the electric source,” says Hill. “So manufacturing of hybrid components is a new growth area. And there’s a lot of room to make the combustion engine more fuel-efficient. I think V8s are going to go away and smaller engines will be made more powerful instead. I also think smaller cars like the Honda Fit and the use of lightweight materials like plastics and aluminum are growth areas. These materials reduce weight but still retain that real structural integrity so that they’re strong cars that don’t fold up in an accident.”

Efficiency is what it’s all about, not only with cars themselves but also with any new facilities that are being built.

“In terms of opportunities in the auto industry, even though many of the older facilities have been closed down, there are new plants being built that are more efficient and adaptable to the current ways of producing cars. Instead of making one big plant to build all the parts of one car, a plant can be built to build four or five different platforms of car,” says McKenna.

Where those facilities are going to be built also is a volatile topic, because although GM chose to build its newest facility in Michigan, long considered to be the home of the auto industry, and Honda built its facility in Indiana, the majority of new automotive plant announcements in the past decade (especially those being built by foreign manufacturers) are in the Southern states.

“There are a couple of plants on the drawing board. Where the car companies build their assembly plants is where our members, the manufacturers who supply all the products and parts for the vehicles, put their new plants, because 70% of [parts for] all new vehicles are supplied by outside companies to the car companies and then the car companies design them and assemble them,” says McKenna. “And most of those plants are being built in the South [in right-to-work states]. There’s one being built in the southwest corner of Georgia, and there’s one in Chattanooga and there’s a BMW plant in Spartanburg, South Carolina. Several plants have been put in Alabama, Kentucky and Tennessee. However, one of the most successful plants is north of Columbus, Ohio, it’s a big Honda facility, which is counter to that thinking. I wouldn’t want to say it’s just because of the unions, it’s probably due to a lot of things. But most of the foreign manufacturing plants are not unionized and they are looking for right to work states.” Tough times call for innovative solutions, so if you’re looking for the locations ready to do what it takes to lure your next automotive site to their community, then read on.

Mississippi: Can-Do Attitude Delivers for Auto Industry

The automotive industry has been hit hard and headlines continue to forecast tough economic times. In the current economic climate, companies must make strategically sound decisions to guarantee ongoing success. With a reputation for on-time/under-budget project management along with flexible, customizable incentives, Mississippi offers some major advantages for business investors. Add in a skilled workforce, educational capacity for industry and a location with access to the world’s major markets, and it becomes clear what Mississippi can offer businesses in the automotive sector and related industries.

Mississippi is home to more than 90 automotive manufacturing, distribution and supplier companies. These include Nissan, PACCAR, Toyota, BMW, Mazda, Caterpillar, Delphi Automotive Systems, Johnson Controls, Tower Automotive and others. BMW officials touted the state’s proximity to major transportation corridors and air transport hubs and a pool of highly qualified workers as major factors in their site selection decision.

The state’s transportation systems—railways, roadways, airports and waterways—are fully integrated to maximize transport options. Mississippi highways were ranked as the fourth best in the country in a national transportation study. Mississippi also is home to 75 airports, 17 rail systems and 15 ports, including two deep water ports on the Gulf Coast that provide access to worldwide commerce. These options offer many logistical efficiencies and, more importantly, significant cost reduction.

Mississippi’s labor force is reliable, with a low 3% absenteeism rate and only a 5% turnover rate. This reliability and stability help ensure the success of any business located in the state. In addition, Mississippi is a right-to-work state with low labor costs, which ease the overall cost of doing business in the state.

Mississippi also is building educational capacity in this sector by developing unique research and development partnerships between automakers and the state’s universities. Efforts like the Centers for Advanced Vehicular Systems at Mississippi State University in Starkville and near the Nissan plant in Canton, MS, and the Polymer Research Institute at the University of Southern Mississippi in Hattiesburg, MS, demonstrate how the state is utilizing its university resources to support Mississippi businesses and enhance the state’s already robust high-tech base. The University of Mississippi in Oxford is making preparations for its newest addition, the Center for Manufacturing Excellence. The center is a result of the university’s partnership with Toyota and the Blue Springs, MS plant (currently under construction) and will offer degrees in engineering with an emphasis in manufacturing along with other industry-relevant, cross-disciplinary studies.

“Mississippi’s university system and its research and development programs have been particularly important to the automotive sector for supporting manufacturing operations,” says Gray Swoope, executive director of the Mississippi Development Authority. “Research is an important part of the industry as companies strive continuously to develop new and better-designed cars and trucks, as well as new materials and processes for vehicle production. We are focused not only on manufacturing vehicles here, but growing R&D support as well.”

Working with the state’s network of two-year and four-year institutions, businesses also have resources to assist with training efforts and develop more efficient manufacturing processes. In particular, the state has joined forces with local community colleges to offer customized workforce training programs to businesses.

Companies are taking note of the vast opportunities in technology, research and educational development in the state. “PACCAR is impressed by the world-class educational opportunities in Mississippi,” said Mark C. Pigott, chief executive officer of PACCAR, Inc., at the company’s groundbreaking event for its $400-million diesel engine plant outside of Columbus, MS.

These advantages add up to the right location for the latest automotive manufacturing, distribution or supplier facility. A skilled workforce, on-time/under-budget project management, low operation and labor costs, notable universities and research centers, a pro-business climate—that’s what Mississippi can do.

Rankin County, MS: Heart of the Auto Corridor

Strategically situated in the heart of the Southeastern automotive corridor, Rankin County, MS is an automotive location success story waiting to happen.

“This is the automotive place to be,” says Noel Daniels, president of the Rankin First Board of Directors. “We have textbook access to anything and everything required by major business and industry, and our county has the resources and the business and political acumen to succeed if a project is right for our community and right for the prospect.”

Rankin County is part of Metro Jackson, MS and within 30 minutes of the $1-billion Nissan manufacturing plant in Canton, MS, with its numerous tier-one and auxiliary suppliers. Located on a 1,445-acre site, the two-million-square-foot Nissan plant has the capacity to produce 250,000 vehicles a year. Last year, Nissan North America, Inc. announced its entrance into the Light Commercial Vehicle (LCV) business through a significant investment in North America. As part of a global commitment to the segment, Nissan said it will introduce to the North American market three light commercial vehicles in three years and forge partnerships with Cummins Inc. for the engines and ZF Friedrichshafen AG for the transmissions. The Nissan facility in Canton was labeled as “key to this new strategy” and selected to become “the manufacturing center for a range of new LCV products aimed at the significant North American commercial vehicle market.”

In addition to the investment for the tooling and development of the three vehicles, Nissan detailed a $118-million expansion of Canton’s production facilities to manufacture the LCVs.

“LCVs will become a major contributor to the future success of Nissan in North America,” said Bill Krueger, senior vice president, Manufacturing, Purchasing & Supply Chain Management, and Total Customer Satisfaction, Nissan North America. “It is a tribute to our employees in Canton that it will be the manufacturing hub for these important new products, key to our sustainable growth in the U.S.”

Rankin County is a three-hour drive from the $1.3-billion Toyota assembly plant in northeast Mississippi, scheduled to open in 2010. The fact that Toyota has chosen to build its strong-selling Prius hybrid in Mississippi for national consumption is of particular note and a testament to the company’s confidence in the state’s business climate and quality of its workforce. The Prius will be Toyota’s second hybrid model to be built in the U.S., the first being the Camry-Hybrid, a Kentucky-built product.

Rankin County is one of the fastest-growing, highest-income counties in Mississippi and ideally suited as a home for a major automotive manufacturer and its vendors and suppliers. Two industrial parks with infrastructure in place, a large skilled labor pool, immediate educational resources and partnerships for customized workforce training, a great quality of life and a truly pro-business atmosphere are what the county offers.

Tom Troxler, Executive Director of Rankin First, summarizes the competitive advantage of his county for the automotive industry in these simple words: “We’re well-connected.” Although his statement refers to so many good and positive things in Rankin County, the primary reference is to location. Less than a day’s drive to every major auto manufacturing facility in the Southeastern and Southwestern U.S., Rankin County is served by I-20, a major east/west interstate artery easily connecting Rankin County with virtually all the major Southern metropolitan areas. To the east, I-20 provides access to Meridian, MS; Birmingham, AL; Atlanta, GA; Columbia, SC, and terminates in Florence, SC with Interstate 95, the major north-south trade route in the Eastern U.S. To the west from Jackson, I-20 connects with Dallas, TX and El Paso, TX where I-20 terminates with Interstate 10.

Rankin County also has quick and easy access via Interstate Highway 55 to Memphis, TN; St. Louis, MO; and Chicago, IL to the north and to Baton Rouge, LA to the South where it connects with Interstate 65 and Interstate 10 to New Orleans, LA. U.S. 80, a four-lane highway that travels through Texas, Louisiana, Alabama, and Georgia, also serves Rankin County. Two other U.S. highways, 49 and 51, connect Rankin County to the Gulf of Mexico and north to Arkansas.

Top-notch transportation, workforce, education attainment, quality of life and business incentives translate into why Rankin County, MS is a Southeastern hot spot for automotive and supplier facilities.

South Carolina: Automotive Magnet in the South

South Carolina is a growing force in the automotive industry, with a diverse landscape that is attracting manufacturers and automotive suppliers alike. South Carolina’s location midway between Miami and New York provides easy access to materials and markets. Five interstate highways, nine commercial airports and two national rail carriers complete a superior intermodal transportation network.

In 1992, BMW established its only North American facility in the upstate near Spartanburg, SC where it produces the popular X5 and X6 models and is in the midst of a $750-million expansion to prepare to build the X3 model. To date, the company has invested about $4 billion and employs more than 5,000.

More than 125 auto-related companies are located within a 10- county region to supply BMW and other Southern manufacturers. Michelin’s North American headquarters is located off Interstate 85 in neighboring Greenville County, SC to support its four tire-production facilities in the state. Also in Greenville, Clemson University is collaborating with BMW, Michelin, Microsoft and others to develop the International Center for Automotive Research (CU-ICAR). The 400-acre campus will be anchored by a Graduate Automotive Engineering Program and will include state-of-the-art research and testing facilities as well as private industry R&D operations that will support the state’s growing automotive industry cluster.

The Port of Charleston is located in coastal South Carolina and is a key location for export, and import, to Latin America and Europe. The Port of Charleston, SC is the most efficient container port in the Southeast. DaimlerChrysler assembles the Sprinter van there, and American LaFrance produces fire engines.

Meanwhile, Florence, SC is home to Honda’s all-terrain vehicle and personal watercraft assembly plant that employs 1,600 at a campus on I-95. At the center of the state, the Greater Columbia area is intersected by I-77, I-20 and I-26, forming a transportation hub to support automotive suppliers there.

Western South Carolina offers yet another opportunity for auto-related companies. Aiken, situated on I-20 between Columbia, SC and Atlanta, GA is home of the Bridgestone-Firestone light truck and automobile tire plant, and is also home to the Center for Hydrogen Research and the Savannah River National Laboratory.

In addition, South Carolina is home to 300 plastics companies; produces 20% of the nation’s capacitors; has more than 100 companies that cast, forge and extrude aluminum; and has 50 metal stamping and forging companies and 35 steel production facilities and foundries.

The South Carolina Power Team, comprised of Santee Cooper and the state’s 20 electric cooperatives, provides a number of incentives, special electric rates, and grants that reduce the cost of locating or expanding manufacturing and distribution facilities throughout the state. South Carolina’s industrial electric power costs 24% less than the national average (2006 data). The Power Team has a full listing of certified sites, industrial parks and buildings on its Web site.

Laurens County, SC: Great Logistics in a Central Location

Laurens County, SC is located mid-way between the metropolitan areas of Greenville-Spartanburg, SC and the state capital of Columbia, SC. It is bisected by two Interstate systems (I-385 and I-26), which make the county easily accessible to I-85 and the Port of Charleston, SC. Greenville/Spartanburg International Airport is within a few minutes drive, as is BMW and Clemson University’s new International Center for Automotive Research. All of these facilities are easily accessible by the interstate systems.

Laurens County also is home to the Michelin Proving Grounds, which has expanded its testing capacity over the past few years. In November 2008, American Titanium Works announced a $420-million rolling mill, which will employ over 300 people. ATW also announced a Research Facility in Clemson’s International Center for Automotive Research. ATW will supply several different industries including the automotive sector. It is believed they could offer a unique opportunity for the automotive industry.

Laurens County has numerous sites and buildings for a prospective company. There are four industrial parks located along the two interstate systems. Woodfield Industrial Park and Owings Industrial Park are located along I-385 near the Greenville/Laurens County line. Woodfield Industrial Park has approximately 130 acres remaining and Owings Industrial Park approximately 275 acres remaining. Owings Park has rail service provided by RailAmerica. Hunter Industrial Park is located at the intersection of I-385 and US 221 and has almost 400 acres available and much of it is rail served by CSX. Clinton Park Corporate Center has one phase that is available for industrial development. Phase three is one mile from I-26 and has approximately 200 acres available for development—most having access to rail which is served by CSX. All utilities are either in or border all the parks. In addition to the industrial parks the county has numerous stand-alone sites, many of which also are rail served. The county has one spec building available for immediate occupancy. It is a 31,600-square-foot spec building in Woodfield Industrial Park, which was completed in January 2007. Owings, Hunter and Clinton Park Corporate Center III Parks are all certified sites by the South Carolina Department of Commerce.

Automotive suppliers provide employment for 30% of the workforce in Laurens County.

The cost of operation in Laurens County is very attractive. Laurens County Council is very pro-business and offers aggressive tax reductions. For example, on a $5 million investment, the county can reduce the assessment ratio thus reducing taxes by more than 40% for a period of 20 years. In addition, the county also has the ability to offer a Special Source Revenue Credit that further reduces taxes for a period of 10 years. Laurens County is classified as a level two county by the state, which makes state incentives very attractive. The State of South Carolina also offers one of the nation’s best training programs with the Ready SC Training initiative.

Laurens County offers an excellent location with easy accessibility, a good available workforce, low cost of operation and a great rural community in which to raise a family.

Auto-Tech Is Revving UpAutomakers are joining forces with tech giants in a full-throttle race to install amazing high-tech advances in vehicles that are ready to roll off the line and hit the road today.

Join 20,000+ Subscribers & Get the latest from Business Facilities!

Business Facilities highlights area economic development and site selection news from around the world. Economic development creates opportunities to grow state, local and metro areas, which are essential for economic growth, improved quality of life and community development.

Business Facilities is a leading full-service media brand specializing in the site selection marketplace. Through a bi-monthly magazine, e-mail newsletters, a news portal, and its LiveXchange event, Business Facilities has created a dynamic community for C-level executives and economic development organizations.